Economics and Personal Finance

T Or F: Personal choices about education, training, and skill development impact earnings True
T or F: People can recieve income from a variety of sources True
T or F: The information a worker provides on the W-4 form does not impact federal tax deductions and personal income. False
Net pay is a Equal to gross pay b Greater than gross pay c What remains after deductions are subtracted from gross pay d None of the above C: What remains after deductions are subtracted from gross pay
Financial Planning calls forA Short term goalsB Long term goalsC Both A and B D None of the above C: Both A and B
Which of the following is the best example of irregular income? A full time job B part time jobC graduation gift D all of the above C: Graduation gift
The W4 form:A Lists the number of people who claim the worker as as dependent on their tax returns B is filled out by each employee, stating the number of withholding allowances claimed C Is a report sent from the employer to both the irs and the employee showing gross wagesD Should be attached to the tax return with a staple when filling B is filled out by each employee, stating the number of withholding allowances claimed
Which factor is most important in securing well-paying jobs throughout your career?A Having a carB Having good educationC Having a clean driving recordD Having established credit B Having good education
Why is it harder to estimate expenses than to estimate income?A Expenses often change more from month to monthB you can never truly know how much you spendC Your income will never changeD None of the above A Expenses often change more from month to month
A budget can help you reach a financial goal by:A Showing you how you can earn more incomeB Allowing you to see where you can cut back on spendingC Giving you the tools to change more fixed expenses to flexible expensesD All of these B Allowing you to see where you can cut back on spending
Preparing a budget is:A an ongoing processB something you only have to do once in your lifetimeC not an effectve way to save moneyD a method for calculating take home pay A an ongoing process
Money in your emergency fund could be wisely used: A To buy a new pair of shoes that went on sale B To lend money to a friend to pay off credit card debtC To pay for an unforeseen health expense D To put money down on a new car C To pay for an unforeseen health expense
T or F: Student loans often don’t require you to start paying them back until after you’ve completed the course(s) True
T or F: Some sources of income and expenses are unanticipated True
T or F: A net worth statement shows one’s financial position True
T or F: A budget is an important tool for managing one’s money to achieve short- and long-term goals True
T or F: Government actions, such as changes in taxes, do not affect personal financial planning False
T or F: Economic understanding and economic conditions do not affect a personal financial plan False
T or F: Insurance can reduce financial risk True
T or F: Insurance does not play a role in financial planning False
T or F: Individuals have few choices to make when selecting insurance False
Which of the following is a type of insurance? A auto B health C life D property E all of the above E all of the above
Most insurance companies sell you insurance because:A The government requires them tooB They are charitable institutions with a mission to reduce hardshipC They generally take in more premiums than they pay out C They generally take in more premiums than they pay out
A deductible is:A The discount you deduct from your premiumB The amount of the loss you payC The amount that is deducted when you buy a policy D The discount received by a health care provider B The amount of the loss you pay
If your MP3 player is stolen from the aprartment you are leasing, what type of insurance would it be covered under?A AutoB HomeownersC RentersD Life C Renters
This type of insurance pays to fix damages that you cause, but does not cover your own car.A No-faultB Collision C Liability D None of the above C Liability
Without health insurance, a routine checkup at the doctor’s office can cost you:A Nothing because doctors don’t charge you if you don’t have insuranceB Several hundred dollars C Almost as much as a carD Nothing, because you can’t get treated without insurance B Several hundred dollars
Buying a home includes:A Choosing a homeB Signing a contractC Securing a down paymentD Financing a homeE All of the above E All of the above
Which of the following best describes a lease?A A legal document that contains all the details of the agreement between the landlord and renter which is signed by both partiesB An informal agreement between the renter and the landlord in which the renter signs it when he or she is thinking about renting an apartmentC A document that describes in detail the apartment for rentD An agreement between someone searching for an apartment to rent and his or her real estate agent A A legal document that contains all the details of the agreement between the landlord and renter which is signed by both parties
Which of the following utilities may be billed separately from your rent?A WaterB ElectricityC Phone serviceD All the above D All the above
How much of your take-home paycheck should be budgeted for all housing related expenses? A 10%B 33% C 60% D 80% B 33%
32. Most landlords require the renter to pay a security deposit at the beginning of the rental agreement. Which of the following is true about the security deposit?a. The deposit is kept by the landlord to cover his management costsb. The deposit can never be greater than $100c. The deposit can be used to repair damage caused by the tenant during the term of the leased. None of these c.The deposit can be used to repair damage caused by the tenant during the term of the lease
33. The most important thing to consider when choosing an apartment is:a. Whether or not pets are allowedb. How many bedrooms there arec. Whether or not the apartment is located on a bus lined. If you can afford to pay your rent and other costs on an ongoing basis d. If you can afford to pay your rent and other costs on an ongoing basis
34. Which of the following information would not be found in a typical lease?a. The amount of the monthly rent payment and the day of the month it is dueb. The name of the previous tenantc. The address of the unit being rentedd. The beginning and ending dates of the rental agreement b. The name of the previous tenant
35. A landlord can refuse to rent you an apartment if which of the following is true?a. You are marriedb. Your ancestors were immigrantsc. You own a cat and a dogd. You are a member of a faith group c. You own a cat and a dog
36. Which of the following are considerations in choosing an apartment:a. Costb. Proximity to workc. Availability of mass transitd. All of the above d. All of the above
37. The location of a home is important because:a. A good location will make a home easier to sell laterb. Homes in good locations will usually appreciate in valuec. Not all locations have good school systems or the same amenitiesd. All of the above d. All of the above
38. A real estate agent is able toa. Get you a lower price on a homeb. Arrange for you to tour homes that you are interested in purchasingc. Assist you at closingd. Both b and c d. Both b and c
39. This will allow you to borrow money to buy a car, but you will have to pay it back with interest over time:a. Giftb. Leasec. Lend-leased. Loan d. Loan
40. This allows you to use a car for a specified period of time for a specified monthly payment:a. Loanb. Contractc. Leased. Gift c. Lease
T or F: There are costs and benefits to both renting and buying a home True
T or F: Independent living involves ongoing housing costs such as utilities and maintenance True
T or F: Basic economic concepts can be used to understand the pricing of products True
T or F: Basic economic concepts can be used to understand consumer spending. True
T or F: The use of decision models can hinder purchase decision making False
T or F: Conspicuous consumption can lead to financial troubles True
T or F: Advertising and marketing do not affect consumer demand and decision making False
T or F: There are costs and benefits to both buying and leasing a vehicle True
T or F: Comparison shopping provides information that does not help consumers obtain the best quality for the best price. False
T or F: Consumers should not weigh costs and benefits to prioritize discretionary spending decisions False
T or F: Consumers have a responsibility to be vigilant True
T or F: Individuals should set up and maintain a filing system True
T or F: There are many types of identify theft and methods for avoiding becoming a victim True
An important economic role for government is to ___________________ property rights.a. Defineb. Establishc. reinforced. All of the above d. All of the above
A property right to a good or service includes the right toa. Exclude others from using a good or serviceb. Transfer ownership or the use of the resources to othersc. Both a and bd. None of the above c. Both a and b
Consumers havea. Rightsb. Responsibilitiesc. Remediesd. All of the above d. All of the above
Which is NOT a step in researching your purchase?a. Comparing pricesb. Getting your friends’ approvalc. Looking at customer reviewsd. Trying on apparel b. Getting your friends’ approval
How can you make the most of a tight budget?a. Making a list before shoppingb. Buying on salec. Setting good prioritiesd. All of these d. All of these
59. Tax deductions and tax credits can __________________ tax liabilitya. increaseb. reducec. not affectd. none of the above b. reduce
A Wage and Tax Statement, commonly known as a W-2 form, provides information for completinga. State tax formsb. Federal tax formsc. Both a and bd. None of the above c. Both a and b
A paycheck has withholding tax taken out:a. If a person earns more than $600 a yearb. That is paid to state and federal taxing authorities c. That is automatically refunded to workers even without filing a 1040EZ formd. That is always equal to $9.54 b. That is paid to state and federal taxing authorities
To file your taxes, you need:a. Every pay stub from the entire yearb. Every deposit slip from your savings accountc. W2 and 1099INT reports, and charitable deduction receiptsd. A computer c. W2 and 1099INT reports, and charitable deduction receipts
Tax refunds:a. Occur when a taxpayer’s income tax withholding exceeds what they oweb. Come from extra money the federal government has left over at the end of the year, and are distributed around February 15c. Come to taxpayers regardless of whether they file an income tax return or notd. Include interest paid to the taxpayer by the federal government based on holding that money throughout the tax year a. Occur when a taxpayer’s income tax withholding exceeds what they owe
An overdraft fee:a. Is a fee charged by a business when a check you write to them bouncesb. Is the minimum balance required to be held in a bank accountc. Is a fee paid to a payday loan companyd. Is the fee charged by a bank when your checking account balance goes below zero d. Is the fee charged by a bank when your checking account balance goes below zero
A credit union:a. Requires membership, but in other respects is like a bankb. Can’t keep savings accountsc. Never has interest rates as good as a bankd. Is only open to college students a. Requires membership, but in other respects is like a bank
When writing a check:a. Always print your signatureb. Sign on the line that says “Pay to the order of”c. Spell out the dollars and cents on the long line that ends in “Dollars”d. Spell out the dollars and cents in the short box next to the $ symbol c. Spell out the dollars and cents on the long line that ends in “Dollars”
With online banking, you can:a. Access accounts that are not your own and transfer money into your own accountb. Use a telephone to talk to a bank tellerc. Pay bills, check your balance, and see if checks have cleared on your bank’s online Web sited. Put a check through a scanner to pay bills automatically c. Pay bills, check your balance, and see if checks have cleared on your bank’s online Web site
Online bill payment:a. Can happen automatically every month, even if you set it up just onceb. Will definitely cause an overdraft chargec. Can only be set up by making an appointment with a bank branch managerd. Cannot be set up online a. Can happen automatically every month, even if you set it up just once
A good password:a. Is an easily remembered number such as your phone number or Social Security numberb. Should be used for all your online accounts, including ones you share with friendsc. Includes a combination of letters and numbers that are memorable and meaningful to youd. Should be written down in your wallet so you will have it wherever you go c. Includes a combination of letters and numbers that are memorable and meaningful to you
You ran short of cash and borrowed $50 from your rich cousin. When you paid her back, she insisted that you owed $60. What is the extra $10 called?a. Briberyb. Interestc. Principald. Credit b. Interest
If you get your first credit card while you’re a full-time student, what can you expect about the card’s APR on outstanding balances?a. It will probably be about the same as the APR on your parents’ cardb. It will probably be lowc. It will probably be low until you graduate, and then it will rised. It will probably be high d. It will probably be high
Which of the following is the best definition of a minimum payment on a credit card?a. A fee that must be paid whether the card is used or notb. The smallest payment that will keep a credit card holder in good standing with the lenderc. The interest on the purchases that were made on the credit cardd. A low introductory payment offered by the lender for a few months until the card holder has established good credit b. The smallest payment that will keep a credit card holder in good standing with the lender
You forgot to pay last month’s credit card bill. Your creditor will probably:a. Cancel your accountb. Send you a reminder to pay the billc. Add finance charges and late fees to your billd. Reduce your minimum payment c. Add finance charges and late fees to your bill
A regular paycheck helps your credit score because:a. It can be cashed and spent quicklyb. It has taxes pulled outc. It shows you will not pay your bills on timed. It indicates you are likely a good credit risk d. It indicates you are likely a good credit risk
Negative items on a credit report that are not correct:a. Can never be removedb. Don’t affect your credit ratingc. Are best ignoredd. Should be removed once the mistake is shown to the credit reporting company d. Should be removed once the mistake is shown to the credit reporting company
Your credit history tells:a. The history of your saving, borrowing, and repayment performanceb. The history of your grade report cardsc. The history of the formation of the Experian and Equifax companiesd. The history of your parents’ saving, borrowing, and repayment performance a. The history of your saving, borrowing, and repayment performance
You can order a copy of your credit report:a. Free online from www.annualcreditreport.com once a year from each of the credit reporting companiesb. Free online from the Fair Isaac Corporationc. Only if you have good credit because this service is not available if you are a poor riskd. Only if you are applying for a credit card a. Free online from www.annualcreditreport.com once a year from each of the credit reporting companies
Improving your credit score will let you get:a. Lower interest rates on loansb. Higher interest rates on savings accountsc. Neither of the aboved. Both of the Above a. Lower interest rates on loans
True or False: All investments eventually increase in value if held long enough.a. Trueb. False b. False
Inflation is:a. A number set by the government that causes prices to riseb. A number measured by the government that describes the changing prices of everyday goods.c. Automatically subtracted from interest rates quoted by banks for their savings accounts b. A number measured by the government that describes the changing prices of everyday goods.
Someone who can tolerate a risky investment would:a. Wake up in the middle of the night worrying about the investmentb. Be very concerned that a downturn would wipe out the long-term gainsc. Understand that an investment that fell when the entire market fell was not necessarily a bad investmentd. Keep all money in a savings account at a bank for long-term growth c. Understand that an investment that fell when the entire market fell was not necessarily a bad investment
Inflation is:a. Always exactly 5% per yearb. The reason most people get ahead by saving money in a mattressc. The rise in the cost of purchasing everyday goodsd. The annual rate of return on a savings account c. The rise in the cost of purchasing everyday goods
Investing in a global stock fund is a good idea to:a. Focus all risk on the U.S. economyb. Keep your portfolio dependent solely on the U.S. dollarc. Diversify into municipal and corporate bondsd. Diversify holdings to spread risk outside the U.S. economy d. Diversify holdings to spread risk outside the U.S. economy
If you have a long-time horizon for investing, you should:a. Lean toward high-risk investments with high-return potentialb. Keep at least 75% cash or money market funds for immediate availabilityc. Own only one stockd. Diversify into savings accounts and U.S. savings bonds a. Lean toward high-risk
True or False: If you buy enough different stocks, you can diversify out all risk in the stock market.a. Trueb. False b. False
Diversification is good because:a. It focuses investments on a single stock to take advantage of growth potentialb. Mutual funds have higher fees than individual stocksc. Interest rates rise and falld. It spreads the risk of investment d. It spreads the risk of investment
Long term investors:a. Sit tight through bull markets and bear marketsb. Buy and sell on a daily basisc. May adjust their holdings to sell when others are selling and markets are fallingd. Always lose money in the long run a. Sit tight through bull markets and bear markets
Over about 40 years, your portfolio should probably:a. Change from higher-risk to lower-risk investmentsb. Sell every holding each year to figure out how well you are doingc. Grow equally well in all sectors, or it is a bad financial pland. Become less and less conservative, increasing in risk from year to year a. Change from higher-risk to lower-risk investments
Your return with a diversified portfolio will:a. Be exactly 11.3% every yearb. Rise and fall, but have less risk than a smaller number of stocks and a smaller number of sectors and asset classesc. Fall if a single company in your portfolio goes out of businessd. Beat absolutely every other investor b. Rise and fall, but have less risk than a smaller number of stocks and a smaller number of sectors and asset classes
When should you begin saving for retirement?a. As soon as you enter the workforceb. Before age 50 and not afterc. After age 50 a. As soon as you enter the workforce
Which of the following is a benefit of an employer-sponsored plan?a. Contributions are not taxedb. Employers often match contributionsc. All of the above c. All of the above
Social Security replaces about what percent of most people’s pre-retirement income?a. 70%b. 40%c. 100% b. 40%
Why is it not a good idea to make early withdrawals from your 401(k)?a. You usually have to pay a strict penaltyb. You cannot put the money back in once you take it outc. You will lose your tax-deferred status on the entire account a. You usually have to pay a strict penalty

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